Recent Arbitration Developments in Greece
By Epameinondas Stylopoulos, Attorney-at-Law, LL.M., ACIArb
The purpose of this report is to highlight recent developments in Greece concerning arbitration. In this context, reference is made to two recent arbitration – related decisions of the Greek Courts reviewing the possible annulment of two separate ICC arbitral awards.
Suspension of an ICC arbitral award enforcement on public policy grounds due to acts of corruption – and finally annulment!
The decision no. 595/2014 of the Athens Court of Appeals (Efetion) is considering the suspension of the enforcement of an arbitral award on ordre public grounds due to acts of corruption. According to the facts, in 2002 the Greek Government decided to proceed with an international contest regarding the security systems of the 2004 Athens Olympic Games (hereinafter “the Systems”). After struggling negotiations, the company formerly named as ‘SCIENCE APPLICATIONS INTERNATIONAL CORPORATION (SAIC)’ and yet named as ‘LEIDOS HOLDINGS, INC’ (hereinafter ‘the Company’) bided successfully with a Euros 254,999,000 offer. In May, 19th 2003 the Greek Government and the Company signed a contract which had as an object the supply, development and support of the Systems. The contract provided explicitly that these Systems will be delivered fully operational within a year’s time in order to meet with the 2004 Athens Olympic Games requirements. Moreover, the contract included a provision that a security system named as ‘TETRA’ will be licensed to the Greek Government for a 10 years period. At the same date (19.5.2003) another contract was signed between the Company and SIEMENS (Hellas) SA under which the latter one undertook to act as the main subcontractor of the Company as regards the supply, development and support of the Systems with a Euros 182,181,234 fee, namely 71% of the Company’s bid. However, the contract between the Greek Government did not evolve properly. The Systems had been delivered partially on 29.10.2008, namely after four years following the 2004 Athens Olympic Games. The Greek Government initially approved the partial delivery of the agreed security services with the exception of ‘TETRA’ subsystem which it had not been found to be delivered as fully operational. Therefore, the Company terminated partially the contract with the Greek Government and subsequently claimed the forfeiture of the relevant letters of guarantee of sum Euros 18,877,375.29 amount. Then, the Company initiated arbitration proceedings before ICC, which accordingly issued the dated 2.7.2013 award ordering the Greek Government to pay the Company in sum Euros 39,818,595 as non-paid costs, damages and VAT. For this award, the Greek Government filed an application for annulment and suspension of its enforcement before the competent Athens court as the enforcement place. The Athens Court of Appeals in its aforementioned decision noted that the almost five years delay in the delivery of the agreed Systems illustrates the fact that the Company had never been in the position to deliver on-time the agreed Systems and the fact that the Company actually acted in favor of her main sub-contractor SIEMENS (Hellas) SA. The latter one is being fully owned by the mother company SIEMENS (Germany) AG, which is known – and widely confessed – that bribed members of the Greek Government during the negotiations period, namely 2002-2007. Moreover, the Court of Appeals continues in its decision with saying that the fact that at the same date the Greek Government signed the contract regarding the Systems the Company signed another contract with SIEMENS (Hellas) SA in order to act as her main sub-contractor with a Euros 182,181,234 fee, namely 71% of the Company’s bid, leads to the conclusion that a co-decision existed between the Company and the two companies of SIEMENS in order the latter ones to undertake the Systems agreement. Additionally, the Court of Appeals continues in its decision with describing explicitly the techniques of SIEMENS (Hellas) SA and SIEMENS (Germany) AG for bribing members of the Greek Government. For these reasons, the Court of Appeals concludes that the agreed contract between the Company and the Greek Government had been the outcome of the corruption techniques used by both SIEMENS companies against Greek interests. Therefore, the Court of Appeals decided that the ICC award dated 2.7.2013 awarding the Company in sum Euros 39,818,595 should be stayed as contradicting to the national ordre public grounds until the competent Court hears the annulment application filed by the Greek Government. Finally, the Court of Appeals accepted the grounds of the Greek Government and with its decision no. 3690/2014 annulled the ICC award dated 2.7.2013 awarding the Company in sum Euros 39,818,595 as contradicting to the national public policy grounds.
Requirements in reviewing an arbitral award at the enforcement stage
The decision no. 6458/2014 of the Thessaloniki Single-Member Court of First Instance (Monomeles Protodikeio) is considering the requirements in reviewing an arbitral award under the light of its possible annulment. According to the facts, the claimant filed an application before the competent court of Thessaloniki, as the place of the enforcement, in order for an ICC award dated 25.2.2013 to get recognized as an enforceable award. The Court in its decision reaffirmed the position of the Greek case-law as regards the recognition and enforcement of foreign arbitral awards in Greece; according to the Greek Code of Civil Procedure (Kodikas Politikis Dikonomias) (CCP) (Arts 903, 905, 906), a party may enforce a foreign arbitral award in Greece only if it has been recognized by the Court of First Instance (of the place of the respondent’s seat or domicile or, in the case the respondent is not seated or domiciled in any place of the country, the Single-Member Court of First Instance of the capital, namely Athens. In any case, the provisions of the International Conventions prevail – Greece is a member to the New York Convention (NYC) (Law Decree 4220/1961). The party applying before the competent Court for recognition and enforcement of an arbitral award will have to submit along with its application the following documents, according to the provisions of Art 4 of the NYC: (a) the original document or a certified copy of the document containing the arbitration agreement; in case the parties have not concluded an arbitration agreement in writing, but have nevertheless participated in the arbitration proceedings, it is sufficient to submit the tribunal’s official records; (b) the original arbitral award or a certified copy thereof officially translated by the Translation Service of the Hellenic Ministry of Foreign Affairs. In any case recognition and enforcement of a foreign award may be refused in Greece, upon request of the party against whom such enforcement is being attempted, in accordance with the provisions of Article 5 of the NYC. Moreover, recognition and enforcement of an arbitral award may also be refused if the competent Greek court finds that: (a) The subject matter of the difference is not capable of settlement by arbitration under the Greek Law; or (b) The recognition or enforcement of the award would be contrary to the Greek public policy rules. Nonetheless, the competent Greek court at this stage will abstain from any review of the award with regard to any legal aspects or the merits of the case. Therefore, the Court reaffirmed its thesis and rejected the annulment application based on the arbitral award res judicata effect.